In mid-February, Marco Lenck, the head of DSAG, presented the results of the annual investment survey. Anyone who, shortly before that, took note of the results made public at the SAP press conference for the presentation of its accounts, could reach the conclusion that there are two separate SAP worlds.
In summary: SAP claims to have been successful with Cloud Computing, S/4 and Hana. However, yet again the DSAG members declare that they are investing in wholly different areas. Could it be that SAP, with key figures that it has defined for itself, and with fanciful accounts, is building a Potemkin village for itself?
More credence should proably be given to the DSAG figures than to SAP’s self-defined non-IFRS key figures, according to which Cloud Computing, S/4 and Hana are an outstanding success.
Here is an enlightening quote from Euro, the magazine for business and money, 3/2016 issue, page 33: “At the end of January, the software group SAP reported provisional figures for 2015: operating result for the total year (non-IFRS) climbed by 13 per cent. Yet by contrast the operating result (IFRS) fell by two per cent, indeed the after-tax profit fell by seven per cent. Not included in the calculations are certain costs for acquisitions, restructurings and legal disputes. Nevertheless: on its Internet page the software group points out that the non-IFRS key figures, defined by the company itself, only make a revealing statement to a limited degree, and also that the amounts eliminated could be of essential significance for SAP”. (End of quote – here we express our thanks to the “Euro” article’s author, Sabine Gusbeth.)
What the DSAG knows
In which areas are DSAG members most planning to invest in 2016? The Top 3 are logistics (46 per cent), marketing/sales/CRM (40 per cent) and finance (32 per cent with multiple responses to the same question possible).
Current digitalisation projects are being tackled jointly by IT and by the relevant subject-specialist department. A mere five per cent of the firms surveyed are placing their point of investment emphasis on S/4, with merely a further nine per cent planning significant investments. According to DSAG, the IT investments are increasing this year by 2.7 per cent. This is somewhat less than in 2015 (3.5 per cent).
Nevertheless somewhat more is being spent in the SAP environment. The budgets for SAP investments are at six per cent (up by 0.6 compared to 2015). In total, 344 individuals (CIOs and company representatives) from DSAG member companies in the German-speaking countries participated in the online survey held in December 2015 and January 2016.
Only one contact individual per company was surveyed. The most strongly-represented size-category of participants (45 per cent) comes from firms with between 1,000 and 4,999 staff. 24 firms from Switzerland took part and 21 from Austria.
Making the comparison with the ꞌIT Trends Studyꞌ produced by Capgemini reveals a differentiated picture. Evidently, traditional topics such as logistics, sales and finance are consuming a bulk of the IT budgets.
Thus, according to Capgemini, this year in the German-speaking countries the CIOs surveyed are spending less money on innovations: not only is the budget for new-structuring and replacement of IT going down from 20.9 per cent in proportional terms to 16.6 per cent now; the same also applies to expenditure for the evaluation of innovations (2015: 9.1 per cent; budget 2016: 7.8 per cent).
This downturn is surprising because 52.3 per cent of the CIOs characterise the expansion of digitalisation as one of their most important goals this year. Yet at present they are not so much banking on innovation: rather, they are approaching digitalisation via the networking of information and processes, as well via the analysis of their data.
This is shown by the correlation to the upturn in use of big data. The information was obtained by Capgemini within the framework of the annual ꞌIT Trends Studyꞌ in September and October 2015. In total, 153 individuals responsible for IT in large companies in Germany, Austria and Switzerland took part; this included eleven companies from the DAX 30.
That the SAP application-users are becoming active with regard to digitalisation is shown in the figures obtained. For 36 per cent of those surveyed, investments in new business models, in the context of digital transformation, is ꞌimportantꞌ to ꞌvery importantꞌ, while 44 per cent remain undecided. For 20 per cent the topic is, if anything, rather unimportant.
Marco Lenck, Board Chairman for the German-Speaking Countriesꞌ Application-Usersꞌ Group, interprets the result as follows: “New business models and processes are important for companies to assert themselves in competition against innovative, versatile start-ups. This challenge faced by CEOs has reached the CIOs. Problems are tackled jointly. The launch into the digital age is being made side by side.” Further proof of this is that decisions on SAP investment are increasingly being met jointly.
The DSAG survey 2016 shows that this is so in more than half the companies. Uwe Dumslaff, Chief Technology Officer at Capgemini in Germany, comments on his results regarding the digital transformation like this: “Many companies are still right at the start of the digitalisation process and have to prioritise their initiatives. That is why they are firstly analysing their data in order to draw up options for new business models.”
But without S/4
Little has changed in the rejection of S/4 by the DSAG members since the congress in Bremen last year. In the SAP area it remains the case that money is being spent mostly on classic topics, such as roll-outs, consolidation and harmonisation.
The S/4 main investments are merely in the mid-single-digit (Euro) range. With S/4, SAP has set itself up as the company highlighting approaches to solutions for the digitalisation of business processes. Among the DSAG members there was already a split picture back in the middle of last year. 37 per cent of those surveyed do not perceive an entrepreneurial added-value in it, eleven per cent have not yet examined the issue of S/4. This is set alongside six per cent who have started a project. Four per cent of the companies have acquired licences.
Around 42 per cent are currently obtaining information. Now there is an S/4 pricelist (see box), by means of which the established ECC 6.0 customers can switch to S/4 with a moderate EUR 9,000 flatrate; nevertheless there are certainly limits to the enthusiasm felt for the new ERP.
What DSAG members need, to be able to weigh up a possible deployment of S/4, is information about which functions are covered by the solution. For 72 per cent of those surveyed in the summer of 2015 this was the most important decision-making criterion.
“The success of an ERP for customers is decided based on its functionality. It is the key to digitalisation projects”, explains Marco Lenck, Board Chairman of DSAG. By now there is at least the White Paper ꞌSimplification List for SAP S/4 Hana, on-premise edition 1511ꞌ, explaining where the differences between old and new are to be found.
However, the DSAG members are still investing in other areas: for medium-sized investments it is business-intelligence solutions that are the front runner. 35 per cent of companies see the need to further support their analysis activities here. SAP products that relate to Industry 4.0 and the IoT (Internet of Things) are slowly shifting into focus among a good one-fifth of the respondents (22 per cent main investments and medium-sized investments).
“What is remarkable is the figures for S/4 Hana”, was Marco Lenck’s comment on the results of the so-called successor to Business Suite. “The product is still really rather young. Companies are moving ahead with main investments in the mid-single-digit (Euro) range. It is evident once again that among our members there are front-runners for the use of new products.”
The DSAG Investment Survey 2016 makes plain that the bulk of members are taking a wait-and-see attitude to S/4. This insight is also borne out by the statements of SAP Board Member for Technology, Bernd Leukert, on the occasion of the press conference for presenting the SAP accounts; on that occasion he was able to present only around 100 operative S/4 customers.
Thus little has changed in the DSAG membersꞌ attitude to S/4 since the annual congress: those surveyed had an absolutely clear perception of the classic Business Suite (S/7) as a strategic backbone of their company. 70 per cent attested to it having a high level of importance, 22 per cent a medium level. An S/4 operated in the company was strategically relevant for more than a quarter of respondents. In the summer of 2015 almost 37 per cent saw it as having a medium level of significance.
Cloud Computing breaking away
The current DSAG investment survey clearly shows that the SAP Cloud products and the Hana-Cloud platform are detached from the mainstream. The Hana Cloud platform is definitively not yet arrived in the market; it is only one per cent of those surveyed that are planning to make their main investment in that product.
The same picture already revealed itself among the DSAG members half a year ago: the message from the annual congress was that the cloud solutions were to be found in the lower half of the single-digit (Euro) range.
“DSAG members have built up a lot of know-how in the area of the Business Suite and put their trust in depicting their processes by means of that product, today and in the future, efficiently and as completely as possible. Despite innovative products, the planning security for the future must be safeguarded on the basis of the Business Suite” – this was the demand formulated by the DSAG in Bremen.
This means that existing SAP products must also provide support to the companiesꞌ digitalisation strategies and lend themselves to being extended or respectively further developed towards that direction.